Singapore Airlines (SIA) - OCBC Investment 2023-05-19: The Sky Is The Limit

Singapore Airlines (SIA) - The Sky Is The Limit

SIA (SGX:C6L) | SGinvestors.ioSIA (SGX:C6L)
  • SIA (SGX:C6L)’s FY23 revenue more than doubled y-o-y to a record S$17.8b, driven by pent-up demand and rapid ramp-up in capacity. Passenger flown revenue increased by 376.3% to S$13.4b as traffic grew 449.9%, outpacing capacity expansion of 94%. This offset a 16.9% decline in cargo revenue to S$3.6b on the back of a 11.4% and 6.2% fall in cargo loads and yields respectively, as demand softened while bellyhold capacity increased.
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  • Altogether, group operating profit and net profit came in at a record S$2.7m and S$2.16m, reversing a S$610m and S$962m loss respectively in FY22.
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Positive outlook ahead despite challenging macroenvironment

  • SIA's management has guided that near-term forward passenger sales remain robust across all cabin classes; however, the airline industry continues to navigate geopolitical tensions, inflationary pressures, and increasing international passenger capacity.
  • Thus far, SIA has been the first off the block to put capacity back into the market as economies reopened, as it minimized retrenchments during the pandemic and resumed hiring early even before border restrictions started to ease fully.
  • Group passenger capacity reached 79% of pre-COVID levels in March 2023, outstripping the 58% level for international scheduled services of airlines in Asia Pacific (APAC). This has allowed SIA to capture much of the pent-up demand.
  • Going forward, management remains confident that SIA is in a strong position to tide through an uncertain macroeconomic environment, through its focus on APAC, which remains a dynamic region for growth, as well as its focus on product leadership, network connectivity, and service excellence.
  • We also note that there could be further legs to the recovery as Chinese international travel activity rebounds more meaningfully in the second half of the year, given that the group is looking to expand its services to China by resuming Scoot flights to cities like Jinan (July 2023) and Nanchang (August 2023), and increasing flight frequencies to key cities such as Fuzhou, Guangzhou, and Hangzhou.

Fair value estimate of S$6.50

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Above is the excerpt from report by OCBC Investment Research.
Clients of OCBC Securities may be the first to access the full report in PDF @

Ada Lim OCBC Investment Research | 2023-05-19

Read also OCBC's most recent report:
2024-02-21 Singapore Airlines - Fighting Gravity.

Previous report by OCBC:
2023-11-08 Singapore Airlines - Bated Breath.

Price targets by 4 other brokers at SIA Target Prices.

Listing of research reports at SIA Analyst Reports.

Relevant links:
SIA Share Price History,
SIA Announcements,
SIA Dividends & Corporate Actions,
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